Friday, June 24, 2022

 My new English book Cycles for Investors is published in Amazon. You can also purchase it in Finnish. It does not promise you superior investment returns, magic formulas to achieve them or help you make exact forecasts about the markets. Instead, it gives you tools to increase your odds to avoid greatest insanity in the markets like buying during bubbles on margin, or selling close to the markets bottoms. It helps you to better understand intermediate and long term cycles related to the financial markets.

About the content of the book

The main parts of the content are the deeper anatomy of the cycles, the cycles related to the national economies, the cycles related to the financial markets and the life cycles of companies. It also addresses the intersection of three important economic cycles and the real estate and commodity cycles. The deeper anatomy of the cycles deals with their psychological profile as well as the factors that shape extremes. National economic cycles include e.g. the cycle of economic development and the cycle of a leading economic country. Financial market cycles include e.g. long debt cycles and stock market cycles. Life cycles related to companies include e.g. technology adoption cycle and industry life cycle. Real estate and commodity cycles have been treated only superficially due to the author’s lack of understanding.

In addition, it explains how an investor can identify the conditions of booms and bubbles prior to collapses. Efforts have been made to present cycles by multiplying their course by cause-and-effect relationships, mostly without numbers. More important than numbers is to understand the course of the cycles and the factors that interact to drive the cycles consistently. The book has focused at least on medium cycles. In perceiving them, numbers can be more misleading if cause-and-effect relationships or the course of cycles are not properly understood.

In today’s world, everything affects everything, so the cycles in the book are more or less related. In particular, the cycles of the national economies and the financial markets are often highly interdependent. Business cycles are also dependent on national economies and financial markets. The latter do not decide the fate of individual companies. It can be said that some companies are not affected.

The book deals with the anatomy of cycles and the following cycles and life cycles:

  • Long psychological / socioeconomic cycle

  • Economic development cycle

  • Leading economy cycle

  • Reserve currency cycle

  • Long and short debt cycles

  • Stock market cycles

  • Technology life cycle

  • Industry life cycle

  • Business life cycle

  • Real estate cycle

The main purpose of the book is to improve the reader’s chances of increasing investment returns by better understanding the cycles related to economics and investments. Improving revenue is most likely to happen by reducing the number of stupid decisions made by readers than by providing magical insights. Warren Buffett and Charlie Munger have often mentioned that they are not particularly wise, but avoid stupidity better than others. This makes sense for the sake of mathematical facts alone. As most people know, a 50% decrease requires a 100% increase, and so on.

The focus is on the extremes and extremes of the cycles, i.e. mainly bubbles, peaks, bottoms, possible crashes, beginnings, and endings. Other parts are less important. One reason for emphasizing the extremes is that, in my view, many long-term cycles are at or near the end or just past them. The ends and the beginnings refer to those cycles without peaks and bottoms. This is the case, for example, with a long psychological / socioeconomic cycle. Extremes are also the moments when the biggest differences are made in investment returns.

In my experience, the book’s publishing platform doesn’t produce clear graphs, so I’ve left them out. I have reduced the time and effort of the reader by keeping the book short. The book is supposed to follow the principle: “the price is what you pay and the value is what you get” In my experience, the number of pages does not match the benefits of non-fiction books.

The book is not for novice investors. It does not explain everything in detail. The reader needs to know what the basic concepts like P / E ratio, Return on Equity and Earnings Per Share mean. A broader understanding of the economy is desirable but not essential. An open mind is also important because the book calls into question many things that at least economists consider true. Independent thinking is also essential. No book offers absolute truth about the economy because it cannot be found. The world is too complex for today’s computing power. This book does not offer it either, as the author knows his limitations.

The book contains a few investment ideas. If they are found, they are vague in the style of "substances used for intoxication can be a good investment in Awakening." (An explanation of the former can be found later.) The book does not contain exact predictions of what is to come, but it gives a broad explanation of what may happen or what is the most likely option for the future. It does not predict when anything will happen.

No comments:

Post a Comment